ADNOC picks OMV as partner for Ghasha project in Abu Dhabi

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VIENNA (Reuters) - Abu Dhabi National Oil Company (ADNOC) has picked OMV to join other partners exploring the Ghasha offshore gas and condensate fields, awarding the Austrian oil and gas group a 5 percent stake in the concession for 40 years.

The logo of Austrian oil and gas group OMV is seen at a gas station in Vienna, Austria, October 30, 2018. REUTERS/Heinz-Peter Bader

Under the deal signed on Wednesday, OMV gains access to the Middle East gas business for the first time, in line with its strategy to make it a core region to balance geopolitical risks it faces in countries such as Russia and Libya.

OMV, which brings in extensive experience in seismic, drilling and engineering work, will contribute 5 percent of the project capital and operational development expenses, the companies said without giving an overall value for the deal.

The Ghasha project consists of three major gas and condensate development projects - Hail, Ghasha and Dalma - as well as other offshore oil, gas and condensate fields, including Nasr, SARB and Mubarraz.

OMV joins Germany’s Wintershall, a unit of BASF, and Italy’s Eni, which hold a 10 percent and 25 percent respectively in the ADNOC-operated project.

“This long-term strategic agreement with OMV, as well as the other Ghasha concession agreements we have concluded recently, underscores ADNOC’s commitment to maximizing value from Abu Dhabi’s substantial gas resources and to ensuring a sustainable and economic supply of gas”, ADNOC Group Chief Executive Sultan Ahmed Al Jaber said.

The fields are expected to produce at least 1.5 billion cubic feet per day when they come on stream around the middle of the next decade, enough to provide electricity to more than two million homes, according to ADNOC.

The fields are also expected to produce more than 120,000 barrels of oil equivalent per day.

“With this agreement, we are expanding our already material position in the Middle East and are further shifting our upstream production towards gas,” OMV Chief Executive Rainer Seele said in a statement.

The group agreed this year to pay ADNOC $1.5 billion for a 40-year concession for a 20 percent stake in the SARB and Umm Lulu offshore oil fields.

OMV is shifting its focus more towards the exploration and refining of gas as it is a less polluting alternative to oil. It aims to become one of Europe’s top players in the gas business.